Given today’s economy, family law practitioners are too often seeing requests to modify support obligations based on reduced income. The ability to base support on a previously inflated or hypothetical income is known as “imputation of income.” However, imputation of income, as discussed below, is a two-way street and unemployed spouses are well-advised to secure employment.

In the case of In re Mosley, 165 CA 4^th 1375, 82 Cal Rptr 397, (2008), a former husband sought a reduction in child support, when he was terminated from his position as an attorney. He earned $400,000 annually and a child support order was based on this salary. His former wife, also an attorney, stayed at home to raise the children during their marriage. The next position he obtained was approximately half of this salary so he sought to modify his order-of-support based on his reduced income. He also argued that the court should consider his former wife’s decision to remain unemployed in re-evaluating support.

There is a 2-prong analysis which the courts invoke in evaluating whether to impute income -

(1)        Whether there is ability to earn income; and

(2)        Whether there is opportunity to work.

The trial court, recognizing the father’s ability to earn bonuses to supplement his salary, refused to modify the support order. The court also refrained from modifying support based on the mother’s apparent ability to secure employment.

On appeal, the court recognized that imputation of his income would be improper, whereas imputation of her income was appropriate based on evidence concerning the mother’s qualifications and available work opportunities.

This decision is to be contrasted with a prior decision known as In re Padilla., 38 CA 4^th 1212, 45 Cal Rptr 2d 555 (1995). Here, the father attempted to decrease support when he gave up his position and started his own company. The Padilla court condemned the father for choosing a non-secure career path and compromising his children’s financial support structure.

The Mosley court was very sympathetic in recognizing the father’s earnest attempts and the mother’s lack thereof, and practitioners are well advised to garner this kind of evidence. Courts clearly want to see that parents are earnestly providing for their children, but clearly are also factoring the economic realities of today.

Sharon Friedman Castiel is a resident of Studio City and practices family law in Downtown, Los Angeles.  She can be reached at scastiel@kmfm.com.

The Walt Disney Company was ordered by a Los Angeles County jury to pay nearly $270 million in damages to a British production company who created the hit game show “Who Wants to Be a Millionaire.”

The production company, London-based Celador, alleged that Disney hid revenue owed from “Millionaire,” and the jury agreed, ordering the Los Angeles-based entertainment giant to pay a stunning price for breech of contract.

Disney said in a statement that the verdict “is fundamentally wrong” and added it “will aggressively seek to have it reversed.”

The trial, which began six years after the production company filed suit, was held in Riverside and had law experts buzzing.

The case was said to have offered a rare look inside Hollywood accounting: the allocation of expenses and revenue on a film or television project, an all-to-frequent area of dispute between studios and their partners.

The attorney for Celador, Roman Silberfeld, argued that the “Millionaire” case was a consequence of vertical integration within media giants like Disney, because its subsidiaries were responsible for both producing and distributing the show.

Silberfeld said in an interview with the New York Times that the Disney subsidiaries, ABC and Buena Vista, “colluded in artificially depressing the network license for ‘Who Wants to Be a Millionaire’ so that there would be no profits to share with Celador.”

Celador had asked for a minimum of $202 million and a maximum of $395 million, Silberfeld said. Celador also received about $21 million in executive producer fees for the show.

Disney claimed the show was in the red more than $75 million.

Disney also said that there was nothing unusual about the way the revenue from “Millionaire” was allocated and pointed to William Morris, who negotiated the original contract more than a decade ago.

The show was on the air from August 1999 to May 2002,came back in syndication in late 2002 and has been on the air since.

Celador sought profits from the show from August of 1999 through the day the original complaint was filed in May 2004, Silberfeld said. An auditing of books and records is continuing, he added.

A Los Angeles jury awarded actor Don Johnson more than $23 million in profits from the CBS TV series “Nash Bridges” the actor said he was owed.

Johnson sued three entertainment companies — Rysher Entertainment, 2929 Entertainment and Qualia Capital — more than a year ago. The jury award came after a two-week trial in which Johnson attended every session.

Rysher Entertainment argued that the show lost money overall due to an expensive production budget, forcing the company to not be able to pay the actor. The company also said that Johnson had already made $40 million from fees as an actor and producer and was not owed any more money.

“We’re disappointed in the verdict and we’ll appeal,” Rysher’s attorney, Bart H. Williams, of Munger Tolles & Olson, said. “We respect the jury’s decision and we think there are a lot of pretty significant appellate issues.”

Media reports said that Qualia Capital had no comment on the verdict and an attorney for 2929 Entertainment, which is a production company founded by Mark Cuban and Todd Wagner, did not return phone messages seeking comment.

The verdict confirmed that Johnson’s contract for “Nash Bridges” included a provision that made him a 50 percent owner in the show’s copyright if it aired 66 episodes – opening the door for possibly more money for the 60-year-old actor. The show ran 122 episodes.

Johnson’s attorney, Mark Holscher of Kirkland & Ellis LLP, said the actor could still collect as much as $25 million more in the future because “Nash Bridges” still airs in 45 countries around the world.

“It was my idea, and I owned the rights in the first place,” Johnson said in a statement. “From the beginning, I have asked only that Rysher honor our contract, and I am so pleased that the jury agreed with me.”

The key testimony came from Skip Brittenham, the attorney who crafted Johnson’s agreement with the production companies more than a decade ago. Brittenham testified that the copyright ownership stake was a “one-of-a-kind” deal in Hollywood.

“Nash Bridges” ran on TV from 1996-2001 and, according to Holscher, generated more than $325 million in revenue, including $150 million from worldwide syndication.

The U.S. Supreme Court ruled last week that the state of Florida can continue with several beach-widening projects that will cause landowners to lose their exclusive access to the ocean.

The 8-0 ruling rejected a challenge for just compensation by a handful of homeowners in the Florida Panhandle who argued that beach-widening projects there changed the classification of their “oceanfront” property to “oceanview” property, which amounted to a “taking.”

The homeowners argued that their property will be devalued by the state-mandated beach widening and erosion-control projects. Private property advocates were hoping this case would result in the Court finding, for the first time, that a court decision can in fact amount to the “taking of property” without just compensation.

The land’s high court upheld a Florida Supreme Court ruling that also rejected the homeowners case for just compensation. The homeowners said the erosion-control project “suddenly and dramatically changed” state law on beach property and caused their property values to decline. The homeowners claimed the state should pay them compensation for “taking” their property, which they argued Florida law recognized as extending to the water line during high tide.

The Florida decision ratified the state’s plan to put new sand along nearly seven miles of storm-battered shoreline that borders the city of Destin and neighboring Walton County and subsequently turns the land into public property, depriving nearby homeowners of the exclusive beach access they previously had.

“The Court appeared to adhere strictly to the notion of ‘taking’ as it is used in common parlance,” said Andrew Morrow, head of KMFM’s real estate practice group. “Here, there was no actual taking but rather the position by homeowners that the erosion control project adversely impacted property values by effecting shoreline access. The project had no measurable effect on the extent of property ownership while a reduction would have required compensation by the government,” he added.

Also of interest, retiring Justice John Paul Stevens took no part in the case, which affirmed the Florida ruling and also, perhaps, because he owns an apartment in an oceanfront building in Ft. Lauderdale, Fla. The area has been slated for an erosion-control; as is the issue in this case.

The Department of Justice is investigating a Los Angeles County-based company’s billing practices, the company said last week.

Monrovia-based AeroViornment Inc. said the Department’s civil fraud section is looking into billing rates for maintenance work, time and materials the military drone maker billed the government on contracts dating back to fiscal-year 2006.

The company said in a statement that it is cooperating with the investigation and added that it does not expect the investigation to have an effect on its business.

“This is an example of the uptick in civil fraud investigations and audits we have been seeing over the last twelve months,” says Stephen Mancini, head of KMFM’s white collar Crimes practice group. “Responding to government inquiries in a prompt and forthright manner is essential to resolving such investigations efficiently and expeditiously. We are seeing a five fold increase in these kinds of audits as the Department of Justice seeks to enforce the goal of greater transparency in government contract work,” Mancini adds.

The company said that a similar investigation took place in February by the Defense Contract Audit Agency and found the company’s billing practices adequate. The company has received more than $50 million in orders from the government since that investigation.

However, investors showed concern, sending shares in the company, which are traded on the Nasdaq stock exchange, tumbling nearly 8 percent after the announcement was made.

The Los Angeles Airport Hilton has been hit with another lawsuit; this time of the class action variety, that alleges the hotel skirted the city’s living wage law by using a temp agency.

The lawsuit was filed Tuesday in Los Angeles Superior Court on behalf of two housekeepers and alleges that the hotel used a temporary employment agency, named Norma’s Corp., to hire temp-workers and pay those workers less than the city’s living wage. The city’s controversial living wage rate is currently at $10.30 per hour for employees who get health benefits and $11.55 per hour for those who don’t.

The lawsuit also alleged that Norma’s Corp. did not make the required contributions to unemployment and disability funds or social security. The suit seeks back pay for the workers and unspecified damages.

The Hilton has long been the most vocal opponent of the city’s effort to extend the living wage law to the 13 major airport-area hotels. The hotels are affected by the law because they are said to be directly benefiting from a city asset – the nearby Los Angeles International Airport – and should be subject to the law.

The Hilton has been hit with several lawsuits that center around alleged non-compliance of the living wage law. The former L.A.-based hotel giant tried to overturn, unsuccessfully, the city’s law through referendum in 2007. The 12 other hotels in the area eventually settled with the city and agreed to abide by the wage law. Hilton also sued the city in an effort to overturn the law, ultimately losing on appeal.

Thousands of condo buyers (and would-be condo buyers) from New York City to Los Angeles are hoping a recent legal ruling involving homeowners in a Virginia community will allow them to get back their hefty deposits put down on shuttered or poorly selling condo projects.

The Wall Street Journal reported that since the real-estate market crashed about two years ago scores of would-be buyers who put down deposits to buy condos have tried to use an obscure federal law to void the deals they signed. The law, enacted in 1968 and called the Interstate Land Sales Full Disclosure Act (aka ISLA), requires developers of subdivisions with 100 or more units to provide a “laundry list of disclosures;” everything from condo association information, zoning regulations and even details such as where the nearest police station is.

However, courts in New York sided with the developers, not consumers, when these cases were heard. The Journal cites two recent decisions, involving a condo project in Harlem and another in Long Island City, where judges decided that the projects were marketed as having more than 100 units however, because fewer than 100 were actually sold, the disclosure rules don’t apply.

But, the Virginia case  seems to have turned the tide and sided with consumers in a similar predicament. A federal judge in Alexandria issued an opinion in March that said a couple could recoup $2 million they paid a developer as a deposit on a lot in a proposed 160-home development.

The couple took out a $6 million loan for their home in the development, which was slotted to be managed by Ritz-Carlton. The luxury hotel chain owner subsequently pulled out of the development, causing the couple to change their minds and sue the developer to recoup their deposit.  The ISLA law states that if the developer fails to meet the disclosure requirements buyers are entitled to back out of the deal and regain their deposits. The law was originally intended to reduce fraudulent sales of swampland in Florida and barren desert in Arizona.

Ritz-Carlton countered by claiming that the development was exempt from ILSA, citing the low number of houses that sold (only 31); the same argument that helped developers in New York win their cases.

A lawyer for Ritz-Carlton declined to comment.

The Journal added that determining whether a development has 100 or more units, and therefore is subject to the law, isn’t as easy as it would appear.

The decision in Virginia puts the focus on the “intentions of the developers” rather than on what ends up actually happening; according to New York-based attorney William J. Geller, with law firm Adam Leitman Bailey. The Journal said Geller is currently handling 438 ILSA-related complaints.

The lawyer who argued and lost the Harlem and Long Island City cases said he plans to appeal those decisions, using the Virginia opinion as the basis for an appeal.

The New York state attorney general’s office also said that complaints from buyers trying to recoup their deposits are on the rise; the office received 475 escrow dispute last year alone, nearly double the number of disputes filed in 2008.

“Los Angeles is a powder keg on this very issue as more and more completed condominium developments started and pre-sold during the boom come on-line,” Andrew Morrow, head of KMFM’s real estate practice group, said. “Owners who are now not willing or able to close on the deal or have seen the value of their investment plummet 40% to 60% before they even took possession are scrambling for relief from heavy purchase termination penalties.  I think its just the tip of the iceberg.”

The owners of a Beverly Hills office tower under construction filed an expected lawsuit against the city for its rejection of a request seeking to convert the building to medical office space.

The Los Angeles Business Journal reported that the owners of the building, the Kobor Family Trust, filed a lawsuit April 20 seeking $40 million in damages after their four-story building, located at 8767 Wilshire Blvd. (at Robertson Blvd.), had its original plans scuttled due to the financial meltdown. Financing for the project fell through after the lender said it would only consider financing the project if it were converted to medical office space.

“This is a costly and cautionary tale” says Andy Morrrow, head of KMFM’s Real Estate Practice Group. “Building-use requirements in finance agreements have grown more common and more restrictive as the commercial real estate credit markets continue to contract.” Morrow adds that; “property developers relying on lender funds need to ensure the restrictive use contained in their loan is not contrary to current and anticipated local use or zoning limitations during the initial feasibility study, otherwise it can be too late … as the Kobor Family Trust found out here.”

City officials in Beverly Hills at the time were considering a cap on medical office space and subsequently rejected Kobor’s bid to convert the building. Kobor appealed to the City Council but that appeal was rejected earlier this year.

Kobor filed the lawsuit on April 20 against the city in Los Angeles Superior Court and challenges the city’s assertion that converting the building to medical office space would create adverse traffic conditions and claims the city was biased against any further medical office projects within its borders. Despite the rejected proposal construction has continued on the project, financed through the Kobor family’s own resources.

Law experts were correct in expecting the Supreme Court to rule against public employees who claim that their privacy was violated after officials from an Ontario, Cailf. Police department read text messages sent on their employer-owned phones.

A majority of the Justices said earlier this week that the Ontario police department acted reasonably by monitoring the text messages of employees using phones supplied by the department. All Ontario police department employees who are issued phones are given a written policy warning that they have no guarantee of privacy in the use of office computers or other electronics equipment.

Supreme Court Justice Stephen Breyer said he didn’t see “anything … unreasonable about that.”

The decision could have broader privacy implications than those of just government workers as courts continue to determine the boarders of privacy issues in the digital age.

“The concept of reduced rights of privacy on the job is not new. The court seems to be heading toward a 21st century extension of prior rulings involving the expectation of privacy in the work place,” said KMFM Senior Partner Andrew Morrow. “We have seen time and again the court weighing an employee’s expectation of privacy in company issued lockers and desks, generally finding it does not exist or is severely limited. I would expect a similar holding by the majority given that these were department-issued phones ostensibly for police business. But as the line between our work and personal lives blurs even more over time the court is going to have to grapple with how to deal the further erosion of this important right.” Morrow added.

The case arose when the police department ran an audit of text message usage by its SWAT team to see how often they were being used for personal reasons. The audit found they were – with some messages being called by the department “sexually explicit.”

Three police officers and another employee complained that the department improperly snooped on their electronic exchanges even after one Ontario police official informally told officers that the department would not look any further if officers personally paid for charges above a monthly allowance.

The 9th U.S. Circuit Court of Appeals in San Francisco said the informal policy was enough to give the officers a “reasonable expectation of privacy” in their text messages and establish that their constitutional rights had been violated. The court also said the text-messaging service provider was wrong in turning over transcripts of the messages without the officers’ consent.

However, the Obama administration is backing the city; arguing that the written policy, not the informal warning, is what matters, and that the employees using the provided phones had no expectations of privacy.

Many expect the highest court to take a narrow path out of the case because the employees involved are police officers.

“I mean, wouldn’t you just assume that that whole universe of conversations by SWAT officers who were on duty 24/7 might well have to be reviewed by some member of the public or some of their superiors?” Supreme Court Justice John Paul Stevens said.

However, Justice Sonia Sotomayor questioned the timing and the motives of the department; adding: “Let’s assume that in this police department … knew … that the police department people spoke to their girlfriends at night. “And one of the chiefs, out of salacious interest, decides: I’m going to just go in and get those texts, those messages, because I just have a prurient interest.”

Law experts have chimed in and say the case could cast a long-reaching net and also shows the naïveté of the land’s highest court to information and technology in the digital age.

“I thought, you know, you push a button; it goes right to the other thing,” Justice Roberts said.

“You mean it doesn’t go right to the other thing?” Scalia said.

The case was City of Ontario v. Quon, 08-1332.

Update: The Supreme Court ruled, in its first case on whether employees have any right of privacy in the text messages they send on company devices, unanimously that even if there is only one text message, employers can read the contents of these messages sent on company or government-owned phones when they have a reasonable need to do so.

“Cell phone and text message communications are so pervasive that some persons may consider them to be essential means or necessary instruments for self-expression, even self-identification,” Justice Anthony Kennedy wrote for the court. “On the other hand, the ubiquity of those devices has made them generally affordable, so one could counter that employees who need cell phones for similar devices for personal matters can purchase and pay for their own,” he said.

Mirroring California’s standards, the Obama Administration took a huge step toward regulating carbon emissions by issuing the Final Rule for Green House Gas (GHG) emissions, in addition to tail pipe emissions for automobiles and light trucks, that will impact a wide variety of commercial and industry sectors throughout the U.S.

On March 29, 2010, the EPA formally announced its Phase-In of the Clean Air Act for Green House Gases which increase requirements and reporting. And just one month earlier, the EPA issued its Final Rule for reduction of air toxins from stationary diesel emissions spanning a wide variance of commercial sectors. In conjunction, new tailpipe guidelines, jointly written by the Transportation Department and the Environmental Protection Agency, set emissions to mileage standards that would mandate a combined fuel economy average for new cars and light trucks of 35.5 mpg by 2016 – with passenger cars forced to meet a target of 37.8 mpg by 2016 and pickups, sport utility vehicles and minivans required to meet an average of 28.8 mpg.

“California has long been the trendsetter for Green Initiatives”, says Susan Caldwell, Chair of Koletsky Mancini Feldman & Morrow’s Environmental Practice Group. The state has enacted more environmental legislation than any other state in the union over the last five years she added. “It’s not surprising the federal government would look to California for guidance on such matters.”

The rules are expected to reduce carbon dioxide emissions by about 30 percent between 2012 and 2016, choking nearly 1 billion tons of greenhouse gases over the lives of all regulated vehicles. The government estimates that the new rules will cost consumers an estimated $434 extra per vehicle in the 2012 model year and $926 per vehicle by 2016. It has been countered, however, that an additional savings of an (averaged) more than $3,000 in fuel savings over the life of the vehicle due to much-improved gas mileage will be gained.

“Putting more fuel-efficient cars on the road isn’t just the right thing to do for our environment; it’s also a great way for Americans to save a lot of money at the pump.” Transportation Secretary Ray LaHood said.

While lending finality to an epic 30-year battle between regulators and automakers- the rules may also set the battlefield for a much bigger fight over emissions from stationary sources like power plants, steel mill and refineries, experts warn. The California Gubernatorial race in November of this year expects to focus on the costs of California’s own carbon and pollutant emission regulations and repeal. To what degree change can be had in light of Federal Regulation, however, is highly contested.

A battle is brewing between city officials and the largest Los Angeles-area utility provider over big increases in electricity rates that the power company said are necessary to pay for the city’s push into the renewable energy generation.

The L.A. City Council already authorized a 5% hike in utility rates, or about 0.6 cents per kilowatt hour, on April 1. However, that plan quickly dissolved when the utility’s board instead moved to impose an increase of about 5.7% and was halted by the city council, postponing any action for three months.

The Los Angeles Department of Water and Power, the nation’s largest municipal utility provider, said it needs significantly more money to manage costs associated with the state’s ambitious plan to get increasingly more power from renewable resources.

The city’s goal is to get 20% of its electricity from green sources by the end of this year, a goal it is on schedule to meet and a goal it hopes to raise to 35% – 40% by 2020. The L.A.D.W.P. currently gets about half of its power from coal – which is an unusually large amount for a utility in a state with no significant coal deposits.

At play here is not only a huge hike in rates, inevitably angering customers and businesses, but also a looming revenue shortfall at the L.A.D.W.P. that prompted its board to demand a double-digit increase of 2.7 cents a kilowatt hour earlier this year. The utility has blamed the shortfalls from lingering effects of the high fuel costs from two years ago and increased purchases of renewable energy. The utility said it has been unable to charge customers the full amount of its rising costs because the city council has capped rates.

But, the plot thickens. City officials aren’t buying it – and, making things worse, the city Controller, Wendy Greuel, announced that L.A. would run out of cash by Cinco de Mayo. Partially to blame for the shortness of cash is the L.A.D.W.P. indicating that it will not send a $73 million payment to the city’s general fund, a payment the utility normally makes in lieu of taxes, saying it does not have the money because the city council blocked the proposed rate hike.

Councilwoman Jan Perry, who is chairwoman of an energy subcommittee, said the appointed utility board “overplayed its hand” in thinking it could ignore the wishes of the city’s elected officials.

Los Angeles’s case could serve as a warning to officials in other cities and states who are also trying to change the energy mix of local utilities, attempting to swap more and more coal for renewable sources, such as wind and sun, to generate power.

The business community has been very vocal in its opposition to rate increases in a weak economy and has warned that the city’s push to generate green jobs is being undercut by high utility prices that would drive businesses from the city.

“We’re going to lose a lot of jobs,” Councilman Greig Smith said. “And this proposal doesn’t shut down a single coal plant.”

In a ruling that seems to confirm common sense, a federal appeals court said it is acceptable for a judge to conduct an Internet search to confirm an intuition about a matter of … common knowledge.

The ruling came down Monday from the U.S. Second Circuit Court of Appeals in New York and encouraged more Internet queries by judges — and not just in criminal cases.

The case that spawned the ruling concerned an Internet search performed by U.S. District Judge Denny Chin, who reviewed several pieces of evidence, including a bank surveillance video showing a robber who wore a yellow rain hat. A yellow rain hat was found in the garage of Bari’s landlord.

Prosecutors alleged that Anthony Bari, who served 12 years in prison for bank robbery, violated terms of his release by robbing a separate Bronx bank clad in the yellow cap.

“We did a Google search,” Chin said. “One can Google yellow rain hats and find lots of different yellow rain hats,” he said.

Considering all of the evidence, Chin found the government met its burden of showing Bari violated his supervised release terms. He sentenced the defendant to three years in prison.

Bari appealed the ruling, based on what he said was Chin violating a federal evidence rule that bars a presiding judge from testifying as a witness by verifying a fact, using the Internet, “whose answer was not obvious.”

The court said the search was legal, saying another rule lets judges note facts “not subject to reasonable dispute” and which can be learned from accurate sources.

Using this “relaxed” standard, it endorsed Chin’s effort to confirm his “common sense supposition” that more than one yellow rain hat is available for sale.

But the ruling went even further, saying improved Internet speeds and search engine technology cuts the cost of confirming intuitions.

“Today … a judge need only take a few moments to confirm his intuition by conducting a basic Internet search,” the ruling said. “As the cost of confirming one’s intuition decreases, we would expect to see more judges doing just that.”

“With the expediency and accuracy of web-based resource materials this seems like the logical next step in insuring proper outcomes result where a judicial officer has a verifiable hunch about something, in this case the variety of yellow rain hats,”  says Stephen Mancini, head of KMFM’s criminal defense practice group.

David Hammer, one of Bari’s lawyers, said he was surprised “at the reasoning, which seems to authorize judges to use the Internet without any clear rules.

“As I [read the ruling] it could apply in any context where the normal rules of evidence are not strictly applied,” Hammer said.

The case is U.S. v. Bari, U.S. Court of Appeals for the Second Circuit, No. 09-1074. Judge Chin has been nominated by President Obama to fill a vacant seat on the Second Circuit.

Photographer Annie Leibovitz took a big step this week in cleaning up her messy financial situation by bringing on board a Santa Monica real estate investment firm. The two parties said they entered into a long-term agreement to help the iconic celebrity photographer manage her debt and stay out of bankruptcy, according to the Financial Times.

The deal makes Colony Capital, LLC the 60-year old’s sole creditor. The new deal helps Leibovitz sidestep bankruptcy and sure up a debt situation that nearly cost her one of her homes and her life’s work after she missed the deadline to repay a $24 million loan she took out with New York-based Art Capital Group. Leibovitz put up her entire catalog and one of her personal homes as collateral on the loan.

Art Capital sued her last summer, saying she had not paid hundreds of thousands of dollars due under its agreements with her. The firm later withdrew the lawsuit and extended the due date on payment.

Colony partner Tom Barrack  said of the deal “ we will be partners in managing her assets and her business so that Annie can spend her time and focus on  pursuing her passion as only she can do.”  Equity firms are better positioned to maximize the value of their collateral than traditional lenders are says Andrew Morrow, co-chair of KMFM’s real estate practice group.  Colony is very innovative in its approach to secured debt.  Its plan to capitalize along with Ms. Liebowitz on her extensive portfolio is a step in the right direction for both parties, he adds.

Leibovitz agreed that the new deal will allow her to fully concentrate on her career while at the same time retaining artistic and proprietary control of her images.  “We will be working on new projects and I will have the support and freedom necessary for nurturing my work and preserving my archive she said.

Colony Capital has invested more than $39 billion primarily in real estate-related assets since its founding in 1991, according to the L.A. Business Journal. Recently, Colony invested $206 million in secured debt to southern  California builder William Lyon Homes through its Colony Financial REIT.  Readers may recall that Colony acquired a $23.5 million loan to take control of the rights to Michael Jackson’s Neverland Ranch in 2008.

With the Holiday Season behind us and tax season bearing down on all of us, selecting the proper tax advice and from whom you take it can be one of the most important decisions a business or individual can make to start out the decade right.

A story in the Jan. 4 issue of the Los Angeles Business Journal illustrates that point. Local billionaire Haim Saban and his trusted financial and legal adviser, Matthew Krane, were involved in one of the most publicized cases in recent memory, and illustrates the importance of due diligence when selecting a tax attorney or advisor – especially when the IRS is involved.

“Before he [Saban] sold his first cartoon, we met and he said, ‘I’m going into the international distribution business in television. Can we set this up in a way that is tax efficient?’ ” Krane said in his L.A. Business Journal interview. “And I said, ‘Yeah, we can.’ And we did.”

Krane, 55, was released last month from a federal holding facility after being there for 16 months, where he was also fitted for a new ankle bracelet. He’s still awaiting his sentence after pleading guilty for not reporting nearly $40 million in income linked to a tax shelter he put about $750 million of Saban’s money into. The case has been called one of the largest tax fraud cases in American history.

“It is important to note that Mr. Saban has not been charged and himself was victimized by Krane’s fraud,” said KMFM partner Andy Morrow. “Krane not only invested Saban’s money in the improper shelter, to the detriment of his client, but he also took a commission on that investment in breach of his fiduciary duties to Saban and then failed to declare that income to the IRS,” Morrow added.

Saban told the U.S. Senate he only followed Krane’s advice in using the shelter and portrays Krane’s work for him as “flagrant lies and deceit.”

The key issue is a shelter Krane used to allow Saban, who was responsible for more than half of Krane’s business, to avoid capital gains on some of the $1.5 billion Saban netted after selling his interest in a Fox TV channel to Disney.

According to the U.S. Senate part of an elaborate tax shelter set up by Krane worked through a series of trades that used non-existent transactions to create losses “and offset real taxable capital gains of U.S. taxpayers so they could avoid paying taxes.”

Krane is to be sentenced in March and faces up to five years in prison. When his house was raided nearly two years ago, investigators said they also found false passport documents, crystal meth, a date rape drug and horse tranquilizers. Krane did not discuss the drugs or passport issues, but did say when all the dust settles and this is behind him, he plans on writing a book.

“I’ve got some good stories to tell,” he told the Business Journal.

The U.S. Department of Justice ruled that Los Angeles real estate mogul Donald Sterling pay $2.7 million to settle allegations that he discriminated against African-Americans, Hispanics and families with children at his Los Angeles apartment buildings.

The settlement amounts to what is the largest payment ever obtained in a housing discrimination case involving rental apartments. The original suit was filed in 2006 and was brought against Sterling, his wife Rochelle and the Sterling Family Trust. It also resolves two other similar lawsuits.

Robert Platt, a partner at West L.A. firm Manatt Phelps & Phillips LLP who represented the Sterling Family Trust in the case, said insurance companies decided to settle the case because of litigation costs.

The Sterlings were accused of discriminating against tenants and prospective tenants at a handful of Koreatown apartment buildings — the Sterlings own and manage about 120 apartment properties in L.A. County.

Sterling is worth an estimated $1.45 billion, according to the L.A Business Journal’s annual rankings, and also owns the Los Angeles Clippers basketball team.

Judges across the country are dusting off their finest robes and buffing up their shiniest gavels — a new request from the 9^th U.S. Circuit Court of Appeals gets the OK to put cameras in federal court trials is gaining steam.

The resolution will first go to the Judicial Conference’s committee on court administration, which meets in Washington D.C June 16-17, where it will face strict scrutiny from a group chaired by U.S. District Judge John R. Tunheim of Minneapolis, Minn.

Cameras are nothing strange in courtrooms but this measure will reverse a long-standing nation-wide ban on photographing, recording and broadcasting of non-jury civil trials at the judge’s discretion.

Why the change of heart?

“Based on our experience in the court of appeals, cameras have not been disruptive and have, I believe, enhanced public understanding of the judicial process,” Chief Judge Alex Kozinski told the Daily Journal in an e-mail statement. “Of course, this is always subject to the control of the presiding judge, so in cases of special sensitivity, the judge could limit camera access or eliminate it altogether.”

The issue of cameras in the court officially began back in 1996, when Associate Justice David Souter told Congress “the day you see a camera come into our courtroom its going to roll over my dead body.”

The 9^th Circuit permits cameras in appellate courtrooms for oral arguments as long as the applets panel grants permission. Since 1991 news media have asked 240 times to record proceedings in that district with two-thirds of those requests being granted.

Judges and lawyers who weighed in on the same plan at a 9^th Circuit conference in 2007 voted 171-96 in favor of cameras – with 90 judges voting in favor with 63 opposed.

“I’m not sure if the time is ripe,” David Sellers, a spokesman for the federal courts’ administration in D.C said. “Judges have been concerned about the impact of cameras on juries, but the proposal is for non-jury situations only.”

A Los Angeles judge ruled that the co-founder of fashion titan Guess Inc. must pay $55 million in damages for trying to ruin the reputation of an accountant he hired to investigate former employees who later successfully sued him.

The o-founder of the L.A.-based Guess, Georges Marciano, was ordered to pay Gary Iskowitz after the accountant had “established that Marciano’s conduct in repeatedly libeling him was not only intentional and in reckless disregard of the probability that Iskowitz would suffer emotional distress, but was also despicable, malicious and oppressive” Los Angeles Superior Court Judge Elizabeth Allen White wrote.

Marciano’s campaign allegedly included derogatory comments made in more than 30 letters and e-mails sent to public agencies, banks and business associates of Iskowitz.

The judgment includes $45 million for Iskowitz and $5 million each to his wife, Theresa Iskowitz and his business partner, Carolyn Malkus, who both are also CPAs.

Last month, a Los Angeles jury determined Marciano must pay the five former employees a total $370 million in damages for defaming and causing them emotional distress by suing them for embezzlement. Marciano has an appeal pending with the California Supreme Court related to that case.

Marciano is also running for governor of California as an independent.

A U.S. District Court in California ruled that a Southern California law firm used material from a Novato, Calif.-based law firm’s copyrighted Web site with out permission and attempted to pass it off as its own.

Magistrate Judge Edward M. Chen of the Northern District of California ruled that San Diego law firm Recordon & Recordon plagiarized material appearing on Brayton Purcell’s Web site and knowingly attempted to pass it off as its own content.

Brayton Purcell alleged that Recordon & Recordon’s conduct caused injury that was likely to be suffered because prospective clients viewing the two Web sites were likely to be confused as to which firm had plagiarized from the other and could erroneously conclude Brayton Purcell was the infringing party, harming the firms business reputation and goodwill and thereby decrease its business and profits.

Recordon & Recordon filed a motion seeking dismissal of Brayton Purcell’s action due to a lack of personal jurisdiction or improper venue, arguing that its practice area was limited to Southern California and that it does not have, nor has it ever had, any clients in the Northern District of the state.

After the judge denied Recordon & Recordon’s motion, the two parties agreed to arbitration – who found in favor of Brayton Purcell.

Brayton Purcell asserted that Recordon & Recordon “willfully, deliberately and knowingly” made commercial use of its copyrighted material and that very few firms have expertise in Brayton Purcell self-acclaimed specialty of elder abuse law.

Joined by Judge Mary M. Schroeder, Nelson concluded that Recordon & Recordon’s alleged infringement was therefore a sufficient basis to confer specific personal jurisdiction and venue in the Northern District was proper.

Last week a study released by a Washington D.C. organization characterized Los Angeles County’s civil court system as an ATM for unscrupulous attorneys and litigants – and even went so far as to call the entire system a “hellhole.”

The American Tort Reform Foundation ranked L.A.’s civil court system as one the sixth-most-unjust — adding that “shakedown lawsuits brought against small businesses under the Americans with Disabilities Act and otherwise astonishingly excessive verdicts are again making Los Angeles one of the places to be for personal injury lawyers,” Tiger Joyce, the think-tank’s president said. “In the end, it seems everyone is a victim of discrimination and everyone gets paid.”

Court spokesman Allan Parachini told the media that the study was based on an “entirely subjective series of observations” and added that with more than a million new, non-traffic filings per year, it’s inevitable some people will be “unhappy with the results of their litigation.”
Ahead of L.A. on the dubious list were the whole state of West Virginia, South Florida, Cook County, Ill., Atlantic County, N.J. and Montgomery & Maconcounties in Alabama.

“Unfortunately, L.A.S.C. Central’s reputation as ‘the bank’ means more trial verdicts are appealed since litigants have little faith that the bench or jury got the case right the first time around,” Andrew Morrow said. “The seemingly inevitable appellate process adds thousands of dollars in additional legal fees and years to the life of any dispute in L.A. County.”

The disease maybe contagious — Orange County’s court system was also put on the report’s “watch list.”